Improving Transport Project Appraisals
In the Islamic Countries
82
5 Results case studies: Iran
This chapter presents the results of the case study on the Islamic Republic of Iran, following the
structure of the conceptual framework as developed in Chapter 2. This case study is based on a
desk research and on interviews with Iranian institutional stakeholders conducted during a
country visit which took place on the period 14-16 January 2019. Details on the interviewed
stakeholders are presented in Annex 1.
5.1 Introduction
The Islamic Republic of Iran has a population of 79.9 million people40 and a total area of more
than 1.6 million square kilometres, making it the 18th most populous country in the world and
the 17th largest one. From the perspective of strategic planning, Iran is characterised by a 20-
year Vision issued in 2005, which sets an annual economic growth target of 8%, and by 5-year
national development plans, which set out the country’s goals for several economic sectors and
provide indications on how the government intends to achieve them. The current 6th
Development Plan (2016-2021) 41 identifies transportation as one of the strategic industries
which priority shall be given to during its reference period.
Iran’s transportation sector has seen a surge in investments across all modes in recent years,
largely thanks to the lifting of international sanctions against the country after the Joint
Comprehensive Plan of Action was agreed in 2015. Numerous contracts have since been signed
by foreign investors for the implementation of large-scale projects (so-called “mega-projects”)42.
The future of transportation investments, however, will strongly depend on the effects of newly-
imposed sanctions43 and on developments of international politics.
Rail transport is specifically singled out by the 5th and 6th Development Plan as a key subsector.
In particular, railway should account for 30 percent of freight transportation in Iran by 2021 44,
up from 11% in 2015. According to the plan, the development of rail freight transport shall be
achieved by upgrading railroads and terminal facilities, and by connecting the national railroads
with regional and international transport corridors so as to boost exports45 .
40 Source: Statistical Centre of Iran, 2016 Census.
41 The “Law on the Sixth Five-Year Economic, Cultural, and Social Development Plan for 1396-1400 (2016 – 2021)” (the
“Sixth Development Plan”) was approved by the Iranian Parliament on 19 March 2017.
42 For instance, in 2016 Italian rail operator Ferrovie dello Stato signed a Memorandum of Understanding to design and
build two high speed rail lines in Iran, connecting Tehran with Hamedan and Qom; India’s Petroleum and Natural Gas
Ministry announced in 2016 that it would invest $20 billion in the development of a major port at Chabahar on Iran’s
southern coast; in 2018, China committed to build a train line connecting the Iranian port of Bushehr to the rest of the
country’s railway network under a $700 million deal.
43 In November 2018, United States sanctions against Iran were restored. In the light of this development, the World Bank
forecasts Iran’s economy to experience a downward trajectory in the medium term, contracting by 1.4% on average
between 2017/18 and 2020/21. Source: World Bank, Iran’s Economic Outlook, October 2018.
44 Source: Tehran Times, Rail freight transport in Iran up 55% , 2017, available at
45 Source: Financial Tribune, 8% Growth p.a. Target for Sixth FYDP, 2015, available at